The new Europe and the third world - Roy Jenkins

Taking up the main themes of his Edinburgh speech on "The Challenge of World Poverty" Roy Jenkins writes on the new European context of that challenge and calls on the enlarged nine-nation community to take the lead in introducing new policies which will work in the best interests of both the Third World and the European Community itself.

If there is one continuous thread which unites those who stand on the Left in politics it is our belief that most problems are community problems, that we all share a responsibility for what happens around us, that there can be no worthwhile life based on an indifference to everyone else. And if no man can be an island, no country can be either. To try to shut oneself off is not only a selfish but an ineffective approach. The world will not go away. On the contrary, every modern development, whether beneficial or harmful, brings it crowding in more closely upon us.

The future prospects of human security and satisfaction depend upon benefits being more widely spread. In the Labour Party we believe this without question in relation to this country. We reject utterly a future in which one man's prosperity, one area's prosperity, is based upon the degradation of another. It is equally true in the wider world. We cannot believe in socialism which stops either at Land's End or John O'Groats. Even if - and it is a very big if - we could solve all our domestic problems on our own, there would be little inspiration or even security in a cellophane-wrapped Britain, hoping like a Western tourist in an Inter-Continental hotel that he was safe both from infection land the upheaval of the land around him.

As the remaining decades of this century unfold, as the world gets smaller and as the balance of population shifts more and more towards the developing countries, we will all of us in the West, however well we order our own affairs, be in increasing danger of living like those in the grand apartment houses of Upper Manhattan, looking across with a mixture of fear and incomprehension at the festering ghettos of Harlem. Our belief in the universality of human rights should unite with an enlightened self-interest to make us reject such a future. Only if there is rapid progress towards a fairer world can we ensure that the receding tensions of East-West relations are not replaced by a still more dangerous and deep-seated cleavage between the rich and the poor world. 700 million people - a third of the two billion people living in the- developing world - live in the Indian sub-continent. In India itself 40% of the population - 200 million people - live on less than 5 pence a day. Calcutta is the most frightening human agglomeration in the world. Nine million people live there, most of them in conditions of unimaginable poverty, conditions as degrading as they are insanitary. And Calcutta as a city was entirely a British creation. To-day, its problems make even those of Bangladesh seem containable.

We cannot shrug off responsibility for such a degree of human suffering. Nor can we shrug off the reality that henceforth we will be attempting to shoulder and share this responsibility within a different political and economic framework - the European Community. This Community has so far proved outstandingly successful in the material reconstruction of the economies of its own members - our task is now to channel that energy and enthusiasm into the far harder and longer struggle to help three-quarters of the people of the world lighten their crushing loads of poverty, malnutrition and disease. This task in no way conflicts with the redistribution of power and wealth within the new Europe. Concern is indivisible and so is selfishness. A society which says "to hell with famine and disease in Bangladesh, it's all their own fault isn't it" - or which takes the same indifferent attitude to the plight of the Ugandan Asians - is extremely unlikely to balance this with compassion and justice for its own pensioners and its own low-paid. Superficially there may seem to be a contradiction between help for those in need abroad and help for those in need at home. It is not a real contradiction. Those who want help must not seek to deny it to others. It is the same current of opinion which will endeavour to help those in need both at home and abroad. And it is the contrary current which will seek to ignore those all over the world who cannot stand on their own feet.

How in practice can the new European Community help to change both the nature and the pace of economic development in the Third World? In the developed world, economic growth has been associated with advance in capital-intensive technology. The more we can install machines to do the work of men the faster labour productivity will grow and the more prosperous we shall become. Even in the developed world such attitudes sometimes now have a somewhat hollow ring. In developing countries they can be a fatal blind alley, however attractive they may be to governments understandably anxious to move their countries into the modern world. In most developing countries primary products make up a high proportion of exports, most people earn their living from the land, and labour is abundant while jobs are scarce. In such economies, the emphasis must be not on saving labour but on using it, not on increasing output per man but on creating jobs for men to do. New agricultural techniques are certainly needed, but they should be labour-intensive techniques. Increasingly, agricultural and other products should be processed before they are exported - but again, by labour intensive methods. And new labour intensive industries must be developed, for it is only by increasing employment outside the agricultural sector that the benefits of industrial growth can be distributed beyond a small enclave of the privileged.

Capital is scarce and capital goods have to be imported; labour is local, and it is people who are unemployed in their millions. Yet the present inherited structure of investment incentives in almost all poor countries directly encourages these capital intensive processes. A subsidy in the familiar Western form of investment grants or depreciation allowances is given, which cheapens the cost of capital relative to that of labour. The conventional attitudes of the donor countries in granting aid and soft loans only for the foreign exchange and capital costs of a project have the same effect. No individual recipient country is prepared to risk changing its investment incentives in isolation; fear that foreign investors will be frightened off or just not understand a new subsidy structure is too great. Few recipient countries are prepared to refuse tied aid; the danger of the aid donor switching the project to another poor country is always there.

A powerful and determined lead is the only way of breaking this deadlock. If we believe in free-flowing multilateral trade, we should not believe in tied aid. In principle this could happen now - the United States for example could take the lead - but is this a real political possibility, with not only the amount of American aid but also the political will, public interest and professional commitment dropping sharply?

In principle, the United Nations could, through its agencies, initiate such a change as the ILO and several UN regional economic commissions have suggested - but with their power drained away by the present basic conflict of interest between important member countries, this seems a forlorn hope. In principle, individual rich countries could come together in twos and threes to push such a scheme; but we are likely to see very similar difficulties to those involved in most multilateral aid schemes and in particular attempts at agreeing simultaneously to untie aid programmes. In practice the only way in which such a change is likely to come about is through the common resolve of the major European countries, which between them provide a substantial share of world aid and have the potential for controlling much of the world trade and investment with which aid is enmeshed. If such a lead were given the Community countries could change the content of their aid programme directly as the costs of untying aid grew less; and investors and designers in developed countries would find it worthwhile to develop and use in poor countries new processes designed to employ Third World resources and meet Third World needs.

Next let us look at trade patterns between the Community and the Third World. The overall rate of growth of trade between the Community and the associated countries has not so far been particularly striking - but the changes within the overall figure have been significant in themselves and very possibly indicative of the effect of British entry on less developed Commonwealth countries. The Community's imports from their associated countries rose from 896 million in 1958 to $1,718 million in 1969 - equivalent to an annual growth rate of 6%. But in this same period exports from associated countries to the old mother countries, France and Belgium, were expanding by only 2.8% and 6.9% a year respectively, while their exports to the Netherlands grew by 9.4%, to Germany by 11.3% and to Italy by 13.4% a year. Associate status for the former French colonies in particular has in practice increased their exports to the other five members of the Community. Exports from these former French colonies to France accounted for 81% of their total exports to the EEC in 1959, but ten years later that proportion had shrunk to 56%. No doubt there would have been some lessening of their dependence on France whatever the institutional arrangements, but it is hard to believe that such substantial increases in the associated countries' exports to the rest of the Community could have taken place without the association agreements or something very like them.

India 1973; New York City 1973

"A society which says "to hell with famine and disease in Bangladesh, it's all their own fault isn't it" - or which takes the same indifferent attitude to the plight of the Ugandan Asians - is extremely unlikely to balance this with compassion and justice for its own pensioners and its own low-paid. Superficially there may seem to be a contradiction between help for those in need abroad and help for those in need at home. It is not a real contradiction."

In a sense Britain's entry into the Community may thus be seen as likely to weaken British ties with developing nations of the Commonwealth; I believe that there will be a more rapid increase of trade between those who adopt associate status and the other eight of the enlarged EEC than would have been the case had Britain's application not been successful. But I would welcome a development of Commonwealth exports to the new EEC for two reasons: first, for the simple reason that these Commonwealth countries should gain materially as they get easier access to a market which is larger than Britain's and has been growing faster over a long period; and I am also convinced that this market as a whole will grow faster than would Britain outside the Community. The second reason for welcoming such a change arises basically from our colonial past; however enlightened we may believe British aid policies and relationships with the developing Commonwealth to be, it is surely not possible for many of the newer countries, in Africa especially, to feel truly independent politically while they are so closely tied to Britain by trade as well as the British heritage in language, culture and administration. If we criticise, as 1 believe we should, the hold of France over several of her "former" colonies, and if we welcome the gradual extension of the other European countries' interests and influence in parts of Africa, then we must be prepared to accept the logic of this position for ourselves. In this situation our Commonwealth ties would be weakened in a material sense; but in place of this sometimes stifling ex-colonial embrace there would be the opportunity to build new relationships which may be easier to accept and therefore more stable for countries which have emerged too recently to independence to be unselfconscious about it.

The Community's relations with the Third World have so far been centered on association - by the concentration on helping associate states by both trade and aid and in appropriate cases by extending associate status to new countries. There is a dilemma which the enlarged European Community will soon have to face - are we to continue with what has so far been the main European task - concentrating European help in practice on the associated countries both by making special trading arrangements and by devoting to them the great bulk of bilateral and European Development Fund aid? I believe Britain's accession to the Community, and the association of many Commonwealth countries with the Community, will help to resolve this dilemma by ending the present sharp division between associated and unassociated developing countries which has been blurred only at the edges by the arrangements made with Nigeria and the three East African countries.

For the former colonies of existing Community members, the bonds of official associate status and historical and cultural association have been the same. With Britain a member of the Community this is no longer possible. Associate status would be quite inappropriate for example for India, a country with a population considerably greater than that of the whole of the new Community, and a history and a culture which is in no way outside the bounds of comparison with our European heritage. Yet the future of India is as important as the whole of the rest of the non-communist world put together.

But as this distinction between the Community's treatment of associated and unassociated poor countries is gradually broken down, there are several pitfalls to avoid. On the one hand, we should not refuse to give more help to associated countries unless we are convinced that the aid would be diverted directly and productively to other developing countries, especially the poorest of the poor. On the other hand there is a longer-term danger that we repeat the old colonial policy of building protected, relatively prosperous enclaves in poor countries; the only difference is that in this case the protected enclaves would be individual countries in a poor Third World.

If we were creating a European Community de novo we might very well feel that the case for separating the Third World into associated and unassociated countries was weak. But viable, living communities of nations are not created by abstract schemes as the history of the formal Federations set up by Britain in newly independent countries shows. Our starting points in the new Community's development policy are the present policy of association, and Britain's own close economic ties with many Commonwealth countries. Whatever the long-term development pattern of these de facto associates of ours should be, it is essential in the shorter term that we secure the most favourable arrangements possible for them, which in many cases necessarily means formal association with the Community. At the same time Britain must continue to work within and through the Community towards the widest possible generalised preference scheme to make all poor countries' exports duty free, and towards expansion of world monetary reserves and world aid capacity, for example by linking the creation of new Special Drawing Rights with the allocation of new soft loan funds to the World Bank and other multilateral aid agencies. By such a combined strategy we would be fulfilling both our commitments - the commitment to help turn the Community into a determined ally of the whole Third World, and the immediate commitment to protect the many Commonwealth countries who depend directly on trade with and aid from this country. How in practice do we throw Britain's influence into the pursuit of this strategy?

Among the developed countries, Britain's record on trade questions is relatively good. Many of the more outward looking EEC political leaders have hoped that Britain will give a new direction to EEC trade policies. In August 1973 negotiations will begin again between the EEC and the developing countries which want association. These talks are part of the process of providing a replacement for the Yaounde Convention, which expires in January 1975. We must ensure that other African countries receive equality of treatment with the Yaounde countries and that Asian countries also receive much freer access for their exports.

Encouragement to process goods before exporting them is what developing countries need, but here the present structure of the EEC preference system is far from satisfactory. The really important manufactured exports from poor countries - textiles and processed food - face very stiff EEC tariff barriers. There is substantial support from within the existing Community for the proposal of Sicco Mansholt, that as the restructuring of EEC agriculture progresses, the EEC should increase its imports of such goods as sugar, cereals, fats and oils. Developing countries produce these more cheaply than Europe. Britain's preference scheme for these goods from poor countries is more liberal than the EEC scheme; we must make sure that we do not move in the direction of the EEC scheme, but make the EEC move towards us. A more liberal trade policy would bring lower prices to Europe as well as help to the Third World. We must not only endeavour to see that the EEC adopts liberal trade policies towards the developing world; we must also try to improve EEC aid policy. Bilateral aid of course remains the concern of the individual countries; it is the EEC aid institutions which can be greatly strengthened by enlargement. In principle these are excellent multilateral aid-giving institutions although less than 10% of EEC aid is channelled through them. But very nearly all the aid which they disburse goes to the Yaounde countries, piling Pelium upon the Osso of French bilateral aid. French aid is not our direct concern, but EEC aid will concern us, and it represents a considerable misallocation of resources. Each year from 1968/70, the European Development Fund gave on average $10 million to Asia, and ten times as much to the relatively tiny population of the franc area in Africa. This bias must be redressed.

If we are to harmonise our aid policies it is important for us to harmonise and then unify our aid administration in the field. At present in many medium sized developing countries the scale of the aid programme undertaken by the Nine countries of the new Community is too small for each to be able to maintain a local aid mission which has adequate professional staff and is at the same time administratively and economically viable. Whether or not these aid missions are now formally part of their country's Embassy or High Commission the impression remains in many developing countries that they are so linked in practice - that they are merely an extension of the donor country's commercial or foreign policy interests in general; and this is an impression which the British Government's amalgamation of the Ministry of Overseas Development with the Foreign and Commonwealth Office has not exactly dispelled. We could, however, make a substantial contribution towards improving the aid relationship and the efficiency with which aid is dispersed and used, by working towards a situation where in most developing countries there would be only one European aid office, handling ongoing aid administration and acting as the local finder and filter of new projects as well as doing the currently often repeated job of monitoring economic and social development within the recipient country and assessing the effect of aid on that development pattern. The very low proportion of aid from the Six which is channelled through the multilateral European Development Fund presents us with yet another example of the chicken-and-egg problem; but an institutional change of this kind taking place on the spot all over the Third World could provide a clear and constructive example of what we mean by talking of the nations of the Community growing together in order to look outwards.

We are not yet tackling these problems seriously enough. Yet if the developing world is neglected, it is only its problems which will grow. An economy with confidence in its own powers of adjustment to meet changing situations can act courageously to increase official aid, to increase the proportion of it which is multilateral and to liberalize trade. A frightened country turns in on itself, and

tries to shut out the dangers of the outside world. The next few years are vital for the developing countries because of the appalling problems which they still face, even though growth has now become a real possibility. They are vital for our relationship with developing countries particularly because of the forthcoming negotiations within the EEC. This is our best opportunity to ensure that the EEC does not see the Third World only through the limited windows of the French excolonial territories. It is our best opportunity to ensure that Europe, emerging as the most powerful trading bloc in the world, can assume a new leadership role by becoming an accepted force not only for European but for world progress.

This is the more important as the US continues, as I fear it will, to offer less to the Third World. The great deficiency in the world aid scene at the present time is the poor performance of the world's richest country. In the early 1960's she allocated 0.5% of her vast GNP to official aid. In 1971 that figure was down to 0.31% and by 1975 it is projected to fall to 0.24%. That gap can only be filled by Western Europe and by Western Europe as a whole.

The question for all of us in the rich West is whether as the remaining decades of this century wear on, we shall find ourselves living anxiously on an insecure pinnacle of wealth, surrounded by a menacing and increasingly embittered majority of the world, or whether by imagination, generosity and understanding we can develop and spread out wealth so as to make the world both a more secure and a fairer place. There is a mixture here of moral imperative and enlightened self-interest. They do not contradict each other.

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